Agriculture to grow 2.5% in FY21 despite Covid-19 blues, locust attack

Labourers sort onions after harvesting at a field. Photo: PTI
The agriculture sector is tipped to grow at 2.5 per cent in this fiscal despite the shadow of Covid-19 pandemic looming on horticulture and the risk to crops from locust attacks.

In its study, ratings agency CRISIL said that agriculture and allied activities could be the only bright spots in the Indian economy battered by the pandemic that has wrecked the growth of industry and services.

“The effects of the pandemic on the sector thus far have, however, been varied. That’s because agriculture and allied activities is not a homogeneous group, but an umbrella of activities, each having its dynamics. For instance, while the share of crops in the agriculture sector’s gross value added (GVA) is the largest, it is also the most volatile in terms of performance. It is the only sector that showed negative performance during some years in the past decade,” the report from CRISIL observed.

In crop year 2019-20, horticulture production is estimated at 313.35 tonnes compared with 291.95 tonnes for food grains. According to estimates of the agriculture ministry, horticulture’s share in the GVA of agriculture and allied activities is 30 per cent, similar to that of food grains.

The coronavirus (Covid-19) pandemic and the lockdown are likely to impact horticultural produce more than food grains since they are non-perishable and can be stored. Moreover, they have a minimum support price (MSP) and government's procurement support. As things stand, rabi procurement has proceeded quite well and the government has announced an MSP hike for 14 kharif crops, assuring farmers of 50-83 per cent returns on their cost of production.

This, however, is not the case for horticulture produce, which is perishable in nature. This was evident in the collapse of wholesale prices of vegetables and fruits in April despite a sharp reduction in their mandi arrivals. Likewise, demand for flowers has collapsed as religious places are shut and marriage ceremonies have been kept in abeyance or are muted. Early indications suggest horticulture exports, too, could take a hit, as fruits like grapes and mangoes are not being exported amid restrictions in many countries.

The recent locust attack remains a key monitorable. Its impact on agriculture output is not a worry for now as rabi crops have been harvested and a full-fledged kharif sowing is yet to begin. That said, a number of standing crops – largely horticulture produce, which was not harvested because of problems in selling has been attacked. Measures to control the locust attack are needed on a war footing, as the kharif sowing season is fast approaching.

According to the study, growth in agriculture and allied activities this fiscal hinges on a bumper food grains production. A normal monsoon will be critical too. Horticulture might have to bear some brunt because of perishability. Livestock remains an important fall-back in times of crop output volatility.

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel